Executive Summary
The strategic management analysis for Pilipinas Shell Petroleum Corporation
(PSPC) was made to study and evaluate the strategy formulation, implementation and
evaluation. It includes the external assessment for the opportunities, threats and
competitive standing of the said company. Furthermore, the analysis of the internal
factors or internal assessment was also made for the marketing, human resource,
production or operation, research and development, management information system,
and accounting or finance of the company.
For the external assessment of opportunities and threats, the company got 2.45
in external factor evaluation (EFE) matrix which is below the average of 2.50. This is an
indication that the company is not fully taking advantage of its external opportunities
and reduce the impact of threats. And for the internal assessment of the strengths and
weaknesses, Shell got 2.41 in internal factor evaluation (IFE) matrix which is below the
average as well. This is mainly due to the slow growth in the operations and low
utilization of the resources. The results in the Competitive Profile Matrix (CPM) gave the
indication that is competing well against its competitors in the Philippines which are
Petron and Chevron.
The analysis of strategic factors in SWOT, SPACE and Grand matrix have
shown that the company should pursue market development strategy where they will
introduce the products to new geographical area. Then in QSPM, the best alternative
that the company could have is to build more stations in Visayas and Mindanao.
Performance Analysis
Main office headquarters: Shell House, 156 Valero Street, Salcedo Village, Makati City
History:
Pilipinas Shell traces its roots to Asiatic Petroleum Company (Philippine Islands), Ltd.,
which started in 1914. In 1959, the Company was incorporated under the name The
Shell Refining Company (Philippines), Inc. In 1973, we officially became known as
Pilipinas Shell Petroleum Corporation.
Shell Overseas Investments B.V. (SOIBV), a corporation registered under the laws of
the Netherlands, holds about 55% interest in PSPC in 2016. The remaining
shareholdings of 45% are owned by Filipino and foreign shareholders.
Products and Services
VMG Analysis
A. Vision
“To be the most admired and trusted company that powers progress for
the Filipino through high quality energy products and services.”
Criteria Yes/No Evaluation
Focused concept Yes The vision reveal the type of business and what it
wants to become
Plausible chance Yes It is clear and could be useful in formulating the
of success mission, the strategies and objectives
Notable purposes Yes The vision is properly aligned with the current
operation of the company
B. Mission
“We delight our Customers with high quality fuels, lubricants and
specialties, and best-in-class technical and convenience services. We
attract and retain the best Employees through very competitive
remuneration and growth opportunities. We engage the most professional
Business Partners in long-term and mutually-beneficial relationships. We
partner with Government and Communities in promoting social
investments and advocacies that contribute to national development. We
deliver consistent, attractive and increasing returns for our Shareholders
through operational excellence, superior value propositions, and strong
corporate governance.”
Criteria Yes/No Evaluation
Customer No The target customers are not stated in the
mission
Product/Services No The products and services are not specified
Markets No The company did not consider including its target
market in formulating the mission
Technology No The technologies being used are not included
Concern for Survival, Yes With the stated purposes and current business,
Growth & Profitability the company is considered committed for its
growth and profitability
Philosophy No The basic beliefs, values, and ethical priorities
are not revealed
Self-concept No The distinct competence is not revealed in the
mission statement as well
Concern for Public Yes The company is responsive to the concern of the
key stakeholders to maintain good public image
Image
Concern for Employees Yes The company considered giving proper
remuneration and growth opportunities for its
employees
C. Goals/Objectives
-Engage efficiently, responsibly and profitably in oil, oil products, gas, chemicals, and
other selected business
-Participate in the search for and developments of other sources of energy to meet
evolving customer needs
-Maintaining a strong long-term and growing position in the competitive environments in
which we choose to operate.
-Maximizing cash generation while optimizing shareholder returns
-Work closely with customers, partners and policymakers to advance more efficient and
sustainable use of energy and natural resources
The goals or objectives of the company are aligned with the mission and vision
statements. They are attainable with the current position of Shell. The achievement of
such goals could help the company attain what it wants to become.
LA CONSOLACION COLLEGE MANILA
Mendiola, Manila 1
SCHOOL OF BUSINESS AND ACCOUNTANCY
PESTEL evaluation
Factors Explanation Impact
Socio-cultural Filipinos travel a lot Demand of gas/oil to run a
vehicle or boat will rise.
Technological Use of electronic vehicles Instead of consuming gasoline,
consumers will use electricity
instead.
Economic Fluctuation of the gas price Consumer will find another
gasoline station or a
substandard quality with a
cheaper amount.
Environmental Oil and gas exploration Damage the particular area that
will get oil extraction.
Political-legal Development, drilling and an The resource wouldn’t be
operating permit available to be extracted if the
government refuses to give any
of the permit.
Porter’s Five Forces of Analysis
1. Rivalry among Competing Firms – High
The strategies pursued by the Pilipinas Shell Petroleum Corporation can be
successful only if they provide competitive advantage over the strategies pursued by
the other oil companies. Small differences in strategies of lowering prices, enhancing
quality, adding features, providing services, and increasing advertising could highly
affect one another’s success.
2. Potential Entry of New Competitors – Low
New gasoline stations can enter the gas and oil industry by franchising the oil
companies’ retail stations or establishing own station, but it is costly to do so. And this
type of entry in the market of petroleum products can only give minimal effect on the
company because it has the second highest market share on the said products.
3. Potential Development of Substitute Products – Low
Firms are in close competition with producers of substitute products in other
industries. The products in gas and oil industry for vehicles can be differentiated on
their efficiency, but these are not easily substitutable without changing or modifying
the types of vehicles being used by the consumers.
4. Bargaining Power of Supplier – High
The bargaining power of supplier affects the intensity of competition in an
industry, especially when there are few suppliers, or when there are few good
substitute raw materials, or when the cost of switching raw materials are especially
high. As for the case of PSPC, there are only few suppliers of crude oil and other raw
materials in the Philippines. The said suppliers are known for being international
suppliers which have reserves of natural gas.
5. Bargaining Power of Consumers – High
The customers of PSPC are large in number, their bargaining power represents a
major forces affecting the intensity of competition in industry. They might shift their
purchases from one oil company to another if they have noticed the price differences.
The bargaining power of consumers also is high because the products being offered
by the oil companies are likely to be undifferentiated.
SWOT Matrix
STRENGTHS
1. Shell has high market share
2. Shell's operation of Tabangao Refinery
3. Shell has broad range of products
4. Supply chain network efficiency
5. Increase in Shell's net income
6. Availability of internally generated cash
7. Strategy in operating retail stations
8. Commencement of NMIF's operation
9. Investment in R&D with global centers
10. Corporate social responsibility awards
OPPORTUNITIES SO Strategies
1. Expansion or franchise of stations 1. Expand retail operations in Visayas
2. Increasing demand of petroleum product or Mindanao (S6, S8, O1)
3. Growth of travel and tourism sector
4. Diversification into new & alternative fuel 2. Upgrade the Tabangao refinery to
5. Approval of Tabangao Refinery upgrade improve and increase its production (S2, S6,
6. Potential discovery of oil & gas reserves O2, O3, O5)
7. Unemployment rate - decreasing
8. Increasing level of disposable income 3. Invest more in R&D activities and
9. Shell stations will be Go WiFi hotspots facilities (S6, S9, O4, O6)
10. Good relations w/ environmental group
THREATS ST Strategies
1. Other oil players continuing expansion
1. Expand and improve retail stations
2. Increasing market share of competitors
(S3, S6, T1, T2)
3. Petron is expanding its refinery plants
4. San Miguel Corp. invest on new refinery
5. Presence of electronic vehicles 2. Upgrade the Tobangao refinery to
6. Govt's PUV modernization program match competitors' refineries (S2, S6, T3,
7. Decrease in sales of vehicles (2018) T4)
8. Taxes on fuel products (2018)
9. Increasing world crude oil prices
10. Decreasing purchasing power of Peso 3. Import and store the maximum
capacity of NMIF (S8, T9, T10)
WEAKNESSES
1. Decreasing amount of sales
2. Slow growth of operations
3. Shell has the lowest LPG market share
4. No investment in retail stations globally
5. Long time decision making
6. Low advertising activities
7. High cost in franchising a station
8. Decreasing number of employees
9. Broadcasted plans not being met
[Link] liquidity ratios are decreasing
OPPORTUNITIES WO Strategies
1. Expansion or franchise of stations 1. Establish more retail networks
2. Increasing demand of petroleum product nationwide (W1, W2, O1, O2)
3. Growth of travel and tourism sector
4. Diversification into new & alternative fuel
2. Establish retail networks in other
5. Approval of Tabangao Refinery upgrade
countries (W1, W2, W4, O1, O2)
6. Potential discovery of oil & gas reserves
7. Unemployment rate - decreasing
8. Increasing level of disposable income 3. Increase the advertisement and
9. Shell stations will be Go WiFi hotspots promotion of products & franchise (W6, O2,
10. Good relations w/ environmental group O3)
THREATS WT Strategies
1. Other oil players continuing expansion
1. Advertise the franchise of gasoline
2. Increasing market share of competitors
stations (W6, W8,T1)
3. Petron is expanding its refinery plants
4. San Miguel Corp. invest on new refinery
5. Presence of electronic vehicles 2. Decrease the investment cost of the
6. Govt's PUV modernization program franchised gasoline stations (W7, T1)
7. Decrease in sales of vehicles (2018)
8. Taxes on fuel products (2018)
3. Purchase shares of Shell Gas [LPG]
9. Increasing world crude oil prices Philippines Inc. (W3, T2)
10. Decreasing purchasing power of Peso
Competitive Profile Matrix
KEY SUCCESS FACTOR MATRIX (KSF)
SHELL PETRON SEAOIL CALTEX
Key
Success Streng Firm Streng Firm Streng Firm Streng Firm
Factor Weig
th Streng th Streng th Streng th Streng
ht Rating Rating Rating Rating
th th th th
Market
0.15 3.00 0.45 4.00 0.60 3.00 0.45 2.00 0.30
Share
Distribution 0.10 4.00 0.40 3.00 0.30 3.00 0.30 2.00 0.20
Reputation 0.25 4.00 1.00 4.00 1.00 4.00 1.00 3.00 0.75
Service
0.20 3.00 0.60 3.00 0.60 4.00 0.80 3.00 0.60
Quality
Financial
0.10 3.00 0.30 3.00 0.30 3.00 0.30 2.00 0.20
Resources
Customer
0.20 4.00 0.80 3.00 0.60 3.00 0.60 3.00 0.60
Loyalty
Overall 1.00 3.55 3.40 3.45 2.65
The competitors of Pilipinas Shell Petroleum Corporation (PSPC) are the major players
in gas and oil industry in the Philippines which are Petron and Chevron. The results in
the Competitive Profile Matrix gave the indication that is competing well against its
competitors.